During his seven years on the SEC, Luis Aguilar had a reputation of looking out for the individual investor. Since leaving the commission in 2015, he has thrown his efforts behind supporting fiduciary advisers as well as the investors they serve.

In one of his post-SEC roles, Aguilar helped launch the Campaign for Investors, sponsored by the Institute for the Fiduciary Standard, a group which promotes investor protection and advocates best practices for advisers.

In an exclusive conversation with Financial Planning, Aguilar, who also recently joined Consequent Capital Management, which has about $2 billion in AUM, agreed to comment on regulation, arbitration practices and SEC oversight of FINRA.

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“Putting the best interest of your advisory client first is clearly the right thing to do.”

Although it’s been nearly eight years since the 2008 meltdown, the SEC has yet to offer a fiduciary rule for public comment. “I wish a fiduciary rule had been brought to a commission vote,” Aguilar says. “I am hopeful that the commission will adopt a fiduciary standard for all advisers who are providing personalized investment advice.”

As he did when he was a SEC commissioner, Aguilar has some strong opinions on how financial services should be regulated. On one hot button — whether clients of broker-dealers should be forced into arbitration to resolve disputes — Aguilar weighs in on the side of individual investors.

Luis Aguilar is known for his support of fiduciary guidelines. (Bloomberg News)

“I think investors should have the right to protect their interests in all available forums,” Aguilar says. “I believe that forcing clients to agree to arbitration before a dispute arises can deny them important rights. My focus is not on arbitration per se. Arbitrations are neither inherently bad nor good. A lot can depend on the particular forum and how arbitrators are chosen, trained and the particular mechanisms employed in reaching decisions.”

While still finding that arbitrations can be “appropriate, efficient and cost-effective way to address disputes,” Aguilar has concerns with “pre-disputemandatory arbitration provisions that force investors to give up legal rights before they even know the nature of a dispute and how their rights may be better protected.”

He adds, “Providing investors with the ability to choose the forum where to bring a legal claim is good for our capital markets because it enhances investor confidence that they’ll get a fair hearing.”

On whether advisers should have to submit to arbitration to settle disputes with their former employers, Aguilar says “This hasn’t been a core investor protection consideration and I haven’t yet given it sufficient study to allow me to form a personal opinion.”

SEC OVERSIGHTMany investor protection advocates would like to see more SEC oversight of FINRA. But Aguilar defends his old agency saying, “The SEC is not a self-funded agency, and its budget and resources are limited. The finite nature of funding can cause the staff to make many judgments as to where best to focus the limited resources. That being said, I don’t have doubts that the SEC staff does the best they can to oversee FINRA.”

He would prefer that the SEC directly appoint FINRA board members the same way it does for the Public Company Accounting Board that oversees public company audits.

Yet as the industry gradually transforms itself to conform to the DoL’s pending best interest rule to do right by clients, it’s clear that financial services giants will continue to fight fiduciary duty.

“If the DoL rule is rescinded for any reason before it goes into effect, then the status quo remains,” Aguilar says. “In the end, I think that both Democrats and Republicans want to do the right thing. And, putting the best interest of your advisory client first is clearly the right thing to do. It only makes common sense for those who are providing the same services to be treated similarly.”